REPORT TO COUNCIL
SUBJECT
Title
Action on Amendment No. 4 to the Agreement with Bates Group LLC for Calculation and Review of Employee Compensation under the Fair Labor Standards Act
Report
COUNCIL PILLAR
Manage Strategically Our Workforce Capacity and Resources
BACKGROUND
In June 2016, the US Court of Appeals for the Ninth Circuit in the Flores v. City of San Gabriel case affirmed the district court's decision and held that the cash payments to employees for unused portions of the employees' benefits allowance must be included when calculating their regular rate of pay under the Fair Labor Standards Act (FLSA). This court decision changed the way employers are required to calculate regular rate of pay for purposes of calculating overtime under the FLSA. It requires employers to take into account cash in lieu payments when calculating overtime rates.
In October 2018, a FLSA complaint was filed against the City by five firefighters who alleged the City failed to pay them and other employees the proper overtime rates for more than four years. The City subsequently agreed to a settlement of $2.7 million to pay all current and former employees entitled to FLSA overtime pay from May 2014 through August 2018.
In May 2019, the City entered into an agreement with Bates Group LLC (Bates), following a competitive procurement process, to assist staff in determining which employees were impacted by the settlement and to calculate back pay for those employees in accordance with the FLSA. Under the agreement, Bates performed an analysis for the period from May 2014 to August 2018 where they reviewed five different bargaining units to determine the pay types to be included in the regular rate of pay and calculated the amount due each employee for the period as a whole.
Since the agreement was executed, it has been amended three times. The first amendment increased the maximum compensation by $25,120 for a revised not-to-exceed maximum compensation amount of $100,000 to ...
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